Bitcoin and cryptocurrencies: understanding where we are

Miguel Pagan, CEO of Cryptotechfin, has shared with Cointelegraph en Español his opinion about the current panorama of the price of Bitcoin and the cryptocurrency market in general, which in recent months have given much to talk about.

Pagán points out that currently, on the one hand, there is the volatility with which those who have been operating in the market for a long time are accustomed, and on the other, a series of news that have been triggering skepticism that is not without meaning towards the entire crypto ecosystem. .

According to him, in order to understand what is happening in a macro context, one must first understand what is giving rise to the value of BTC, which has been rising until now, and why its price has been falling for several months.

In this sense, Pagán stated that one of the biggest challenges in terms of understanding in the digital age for more traditional investors has always been knowing what gives value to BTC. “If we don’t have any reserves behind or any state, what would prevent a crisis like the one with the tulips?”he questioned.

“This comparison, repeated ad nauseam, together with the term “bubble” is what the most traditional sector has used to criticize this asset of the digital age, not being aware of the paradigm shift that has happened since the digitization of economies given by globalizationsaid Pagán, who also argued that the current economic model has created a debt equivalent to that of the Second World War (data from the United States economy, but extrapolated to a large number of economies globally).

“Inflation does nothing but grow and grow as a method of dealing with debt that used to work but today with the increasing growth of great fortunes it does not seem to be a solution to any of the current problems”commented.

For his part, Pagán also stated that one could currently speak of debt, inflation, unsustainable consumption or many other terms that tend to be thrown around carelessly, but which, according to him, are not without a real basis, mathematics.

Bitcoin as a store of value

In reference to Bitcoin, Pagán began by noting that Bitcoin emerged as an alternative digital value, after several failed attempts at the creation of a global currency, and for him, it is not surprising that the BTC speech convinced so many, after the bad experiences with the banking sector derived from a system that makes it its central axis and that in itself no longer has the characteristics of a system “healthy”or rather, a system “steady”.

“BTC has evolved from a currency to a reserve of value, and to a kind of “payment gateway” as its use as a currency is unsustainable due to the high transactional price imposed by the network. Patches like the “lightning network” were invented to solve its scalability problems. Meanwhile, around it, an ecosystem of “decentralized” networks grew that sought to solve the problems that banking and the financial sector had had for centuries”, said.

Nevertheless, Pagán asked if BTC will continue to be a store of value in the future, before pointing out that the answer, as always, will be what happens in the world in the meantime and as long as the users of its network are maintained or increased, which are what his judgment gives him value. “Through the globalization of digitization we have been endowed with that “power” to determine what has value and what does not”said.

“If inflation continues at the current rate, it is logical to think that, by default, BTC will continue to “rise in value” in the long term, although this rise will not be a rise per se, but rather a fall in the rest of the more traditional assets due to inflation”Pagan argued.

“If inflation continues at its current rate and as long as the market continues to believe in the potential of cryptocurrencies and decentralized finance, it stands to reason that the price, in the long run, will only go up”he explained.

Important events in the crypto world

As for the crypto world in general, Pagán believes that we have experienced a series of events “historical” recently that have questioned precisely the integrity of the crypto ecosystem and the actors behind the new web 3.0.

“We are talking about the crisis (attack, or whatever you want to call it) of LUNA, about the most recent problems that have been generated due to the lack of liquidity in one of the great providers of profitability in the market, Celsius, or even about how the fear of the recession that we will probably experience in the coming years is making investors withdraw their capital from any high-risk asset”Pagan commented.

He also stated that the crypto world is still very similar to the startup world, in which very few companies get ahead and a large majority perish along the way. “Not all that glitters is gold, and as outside of web 3.0, there are many actors who, with large marketing campaigns, large bets or large frauds, have managed to simulate value propositions and convince not only new capital in the market, but also the old that they are the “new crypto unicorn”said.

“This, unfortunately, has done nothing but harm the sector and in a sector as sentimental as the crypto sector, bad news harms the entire ecosystem”he added.

Having said this, Pagán believes that there will come a time when this will not be the case, and independence will be generated between each of the currencies in the market and in which fear outside of web 3.0 does not translate into a global fall, but into a correction of the prices of the cryptocurrencies affected by the crisis in particular. “Today, the crypto market is still in its early stages, volatility is one of its most attractive and at the same time most hateful components and as long as there is still uncertainty in the market, the riskiest bets will continue to be for investors who have that profile, a minority profile compared to the global capital that generally likes to bet on insurance”, he said.

Finally, Pagán commented that Only time will show if the bottom has been reached, as global circumstances are unique and the future uncertain. However, he expressed that what is clear is that the BTC will continue, as well as the ecosystem, and that as long as we do not manage to solve the problems of the current economic system, it will be a bet, of “more or less risk, but with an advantage indubitable” for those who believe in the new digital age versus more traditional assets.

Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.

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